SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(X) Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended June 30, 1996 or
( ) Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _______ to _______
Commission File Number 1-7444
OAKWOOD HOMES CORPORATION
(Exact name of registrant as specified in its charter)
North Carolina 56-0985879
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7800 McCloud Road, Greensboro, North Carolina 27409-9634
(Address of principal executive offices)
Post Office Box 27081, Greensboro, North Carolina 27425-7081 (Mailing address of
principal executive offices)
(910) 664-2400
(Registrant's telephone number, including area code)
7025 Albert Pick Road, Suite 301, Greensboro, North Carolina 27409 (Former
address of principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No _____
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock as of July 31, 1996.
Common Stock, Par Value $.50 Per Share . . . . . . . . . .45,214,488
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QUARTERLY REPORT ON FORM 10-Q
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Quarter Ended June 30, 1996
OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
Greensboro, North Carolina
The consolidated financial statements included herein have been prepared
by the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and disclosures normally
included in annual financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations, although the Company believes that the disclosures
contained herein are adequate to make the information presented not misleading.
These consolidated financial statements should be read in conjunction with the
financial statements and the notes thereto included in the Company's latest
annual report on Form 10-K.
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OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(in thousands except per share data)
<TABLE>
<CAPTION>
Three months ended
June 30,
1996 1995
<S> <C> <C>
Revenues
Net sales $239,305 $204,240
Financial services income 18,909 16,448
Other income 5,253 5,455
Total revenues 263,467 226,143
Costs and expenses
Cost of sales 165,753 148,892
Selling, general and administrative expenses
Non-financial services 58,914 46,455
Financial services 4,591 3,189
Provision for losses on credit sales -- 971
Interest expense
Non-financial services 510 648
Financial services 4,373 6,096
Total costs and expenses 234,141 206,251
Income before income taxes 29,326 19,892
Provision for income taxes 11,457 7,101
Net income $ 17,869 $ 12,791
Pro forma information (Note 2)
Income before income taxes $ 19,892
Provision for income taxes 7,651
Net income $ 12,241
Earnings per share (fiscal 1995 amounts are pro forma - Note 2)
Primary $ .38 $ .27
Fully diluted $ .38 $ .27
Dividends per share (Note 2) $ .01 $ .01
Weighted average number of
common shares outstanding (Note 2)
Primary 46,686 45,880
Fully diluted 46,686 45,886
</TABLE>
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OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(in thousands except per share data)
<TABLE>
<CAPTION>
Nine months ended
June 30,
1996 1995
<S> <C> <C>
Revenues
Net sales $606,797 $522,720
Financial services income 68,580 44,950
Other income 13,729 12,684
Total revenues 689,106 580,354
Costs and expenses
Cost of sales 432,820 386,045
Selling, general and administrative expenses
Non-financial services 147,079 116,789
Financial services 13,337 8,547
Provision for losses on credit sales -- 1,237
Interest expense
Non-financial services 1,763 1,662
Financial services 15,586 16,863
Total costs and expenses 610,585 531,143
Income before income taxes 78,521 49,211
Provision for income taxes 30,623 17,591
Net income $ 47,898 $ 31,620
Pro forma information (Note 2)
Income before income taxes $ 49,211
Provision for income taxes 18,896
Net income $ 30,315
Earnings per share (fiscal 1995 amounts are pro forma - Note 2)
Primary $ 1.03 $ .66
Fully diluted $ 1.03 $ .66
Dividends per share (Note 2) $ .03 $ .03
Weighted average number of
common shares outstanding (Note 2)
Primary 46,418 45,950
Fully diluted 46,453 46,051
</TABLE>
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OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
(in thousands except share and per share data)
<TABLE>
<CAPTION>
June 30, September 30,
ASSETS 1996 1995
<S> <C> <C>
Cash and cash equivalents $ 32,912 $ 6,189
Receivables and investments 468,660 480,875
Inventories
Manufactured homes 151,164 136,457
Work-in-process, materials and supplies 15,065 12,691
Land/homes under development 1,315 2,042
--------- -------
167,544 151,190
Properties and facilities 124,892 101,758
Deferred income taxes 16,301 15,546
Other assets 25,988 27,082
--------- -------
$ 836,297 $ 782,640
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term borrowings $ 172,407 $ 154,400
Notes and bonds payable 140,259 198,812
Accounts payable and accrued liabilities 144,242 87,405
Reserve for contingent liabilities 2,376 3,184
Other long-term obligations 7,984 20,431
Shareholders' equity
Common stock, $.50 par value; 100,000,000
shares authorized; 45,176,000 and 22,145,000
shares issued and outstanding 22,588 11,086
Additional paid-in capital 141,685 149,482
Retained earnings 206,556 160,000
-------- --------
370,829 320,568
Unearned ESOP shares (1,800) (2,160)
369,029 318,408
$ 836,297 $ 782,640
</TABLE>
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OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
Nine months ended
June 30,
1996 1995
<S> <C> <C>
Operating activities
Net income $ 47,898 $ 31,620
Items not requiring (providing) cash
Depreciation and amortization 7,678 6,715
Deferred income taxes (755) (1,720)
Provision for losses on credit sales -- 1,237
Gain on sale of securities (15,020) (776)
Other 290 344
(Increase) in other receivables (12,627) (18,795)
(Increase) in inventories (16,354) (58,226)
Increase in accounts payable and accrued liabilities 46,606 13,765
Increase (decrease) in other long-term obligations (2,087) 7,695
Cash provided (used) by operations 55,629 (18,141)
Installment receivables issued (490,330) (333,772)
Purchase of installment loan portfolio (1,465) --
Sale of installment loans 497,374 353,951
Receipts on installment receivables 18,434 28,984
Cash provided by operating activities 79,642 31,022
Investing activities
Additions to properties and facilities (29,569) (32,362)
Other (1,833) (1,409)
Cash used by investing activities (31,402) (33,771)
Financing activities
Net borrowings (repayments) on short-term credit facilities 18,007 (4,000)
Issuance of notes and bonds payable -- 29,890
Payments on notes and bonds (41,597) (31,485)
Cash dividends (1,342) (1,269)
Distribution to S corporation shareholders -- (2,111)
Proceeds from exercise of stock options 3,415 761
Cash used by financing activities (21,517) (8,214)
Net increase (decrease) in cash and cash equivalents 26,723 (10,963)
Cash and cash equivalents
Beginning of period 6,189 16,974
End of period $ 32,912 $ 6,011
</TABLE>
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OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
1. The consolidated financial statements reflect all adjustments, which included
only normal recurring adjustments, which are, in the opinion of management,
necessary to present fairly the results of operations for the periods presented.
Results of operations for any interim period are not necessarily indicative of
results to be expected for a full year.
2. On April 24, 1996, the Board of Directors declared a 2-for-1 stock split
payable in the form of a 100% stock dividend on May 31, 1996 to shareholders of
record on May 17, 1996. All share and per share amounts have been adjusted
retroactively to give effect to the stock split.
On June 30, 1995 the Company completed its business combination with Destiny
Industries, Inc. ("Destiny") by issuing 1,850,000 shares of its common stock in
exchange for all the outstanding common stock of Destiny. The business
combination has been accounted for as a pooling of interests, and accordingly
the accompanying financial statements reflect the combined results of operations
and financial position of the Company and Destiny for all periods presented.
Prior to the merger, Destiny was a Subchapter S corporation, and accordingly its
results of operations were includable in the income tax returns of its former
shareholders. The pro forma financial information for fiscal 1995 set forth in
the consolidated statements of income reflects, on a pro forma basis, a
provision for income taxes and net income assuming Destiny's results of
operations had been included in the Company's income tax returns for such
periods.
Because earnings per share for fiscal 1995 computed on the basis of historical
net income would not reflect income taxes attributable to Destiny's earnings,
historical earnings per share amounts for such periods are not meaningful and
accordingly have been omitted. Pro forma earnings per share for fiscal 1995 have
been computed on the basis of pro forma net income.
3. The Company is contingently liable as guarantor on installment sale contracts
sold to unrelated financial institutions on a full or limited recourse basis.
The amount of this contingent liability was approximately $80 million at June
30, 1996. The Company is also contingently liable under terms of repurchase
agreements with financial institutions providing inventory financing for
retailers of homes produced by Destiny and Golden West Homes, manufacturing
subsidiaries of the Company doing business with independent dealers. The Company
estimates that its potential obligation under repurchase agreements approximated
$41 million at June 30, 1996.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three months ended June 30, 1996 compared to three months ended June 30, 1995
The following table summarizes certain key statistics for the quarters
ended June 30, 1996 and 1995 :
1996 1995
Retail sales (in millions) $ 197.7 $ 155.2
Wholesale sales (in millions) 34.5 46.0
Other sales - principally relating to
communities (in millions) 7.1 3.0
Total sales (in millions) 239.3 204.2
Gross profit % - integrated operations 32.9 % 29.6 %
Gross profit % - wholesale operations 20.5 % 19.1 %
New single-section homes sold - retail 3,902 3,588
New multi-section homes sold - retail 1,807 1,244
Used homes sold - retail 445 476
New single-section homes sold - wholesale 322 477
New multi-section homes sold - wholesale 958 1,263
Average new single-section sales price - retail $27,700 $26,200
Average new multi-section sales price - retail $47,400 $46,300
Average new single-section sales price - wholesale $14,200 $14,500
Average new multi-section sales price - wholesale $30,700 $30,800
Weighted average retail sales centers
open during the period 241 186
Average new home sales per sales center 23.7 26.0
Retail sales dollar volume increased 27%, reflecting an 18% increase in
new unit volume and increases of 6% and 2% in the average new unit sales prices
of single-section and multi-section homes, respectively. New unit volume rose
primarily due to a 30% increase in the weighted average number of sales centers
open during the period. While average new unit sales per sales center decreased
9%, average dollar sales per center were almost constant, principally due to
the increased significance of multi-section homes in the retail unit mix. In the
third quarter of fiscal 1996, the Company opened or acquired 12 new sales
centers compared to 5 sales centers in the third quarter of fiscal 1995. Because
the Company plans to open approximately 45 to 50 new sales centers annually over
the next several years, management does not expect any significant increase in
the average number of new homes sold per sales center over the near term. Total
new retail sales dollars at sales centers open more than one year rose 4% in the
quarter, while same store unit sales decreased 3%. Retail sales of multi-section
homes accounted for 32% of new home unit sales in the third quarter of fiscal
1996 versus 26% in the prior year.
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Wholesale sales dollar volume (which represents sales by Golden West and
Destiny to independent dealers) declined by 25%. The decline in wholesale volume
reflects execution of the Company's strategy of changing the distribution of
products produced by Golden West and Destiny from independent dealers to
company-owned retail sales centers. During the quarter ended June 30, 1996,
approximately 40% of Golden West's and Destiny's total shipments were to Oakwood
sales centers, compared to 8% in the third quarter of fiscal 1995; shipments to
Oakwood retail centers are not included in the wholesale dollar sales and unit
sales in the table above. Management expects Golden West's and Destiny's unit
sales to Oakwood to increase in future quarters. To the extent the Company is
successful in establishing company-owned retail centers in Golden West and
Destiny markets, the decline in sales to wholesale dealers will continue.
Gross profit margin - integrated operations reflects gross profit earned
on all sales at retail as well as the manufacturing gross profit on retail sales
of units manufactured by the Company. Gross profit margin - integrated
operations was 32.9% in the current period compared to 29.6% in the third
quarter of the prior year. The increase reflects improved sourcing of retail
unit sales from company-owned manufacturing plants as well as improved
manufacturing efficiencies. Approximately 92% of the total new unit retail sales
volume was manufactured by the Company in the third quarter of fiscal 1996,
compared to 77% in the third quarter one year ago.
Wholesale gross profit margins increased to 20.5% in the current quarter
from 19.1% last year, primarily due to increased margins at Destiny. This growth
is due to several factors including reductions in certain materials costs and
increases in production levels. The integration of Destiny products into the
Oakwood distribution system allows for greater production levels at Destiny
plants, as well as a reduction in shipments to certain independent dealers with
respect to which gross profit margins were not at desired levels.
Financial services income increased 15% to $18.9 million from $16.4
million last year. Interest income earned on loans held for investment and on
loans held for sale prior to securitization declined to $8.0 million in 1996
from $10.3 million the prior year. Interest on loans held for investment
declined due to normal amortization and prepayments, but was partially offset by
an increase in interest on loans held for sale due to higher average outstanding
balances during the third quarter of fiscal 1996 versus the prior year. Loan
servicing fees increased from $3.0 million for the third quarter of 1995 to $4.0
million in the third quarter of 1996, reflecting the increased size of the
Company's securitized loan servicing portfolio. REMIC residual income increased
from $1.6 million to $4.5 million, reflecting the shift in the Company's
financing strategy toward more frequent securitization of its loans from holding
loans for investment.
Financial services income also includes gains of approximately $772,000
and $542,000, from the sale of asset-backed securities in the third quarter of
fiscal 1996 and 1995, respectively.
Non-financial services selling, general and administrative expenses rose
to 24.6% of net sales compared to 22.7% of net sales last year. The majority of
the increase in these expenses as a percentage of net sales is attributable to
the increased percentage of homes produced by Destiny and Golden West which are
being distributed through the Oakwood retail network, and the corresponding
decline in wholesale sales. As the Company executes its integration strategy and
Destiny and Golden West become largely captive manufacturers, wholesale sales
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to independent dealers will continue to decline. As a consequence, while Destiny
and Golden West selling, general and administrative expenses in absolute dollars
are declining, they represent an increased percentage of consolidated sales.
Non-financial services selling, general and administrative expenses have also
increased as a result of the increased accruals for long-term management
incentive compensation payable based upon the level of Company profitability for
fiscal 1994 through 1996, expenses related to the increased number of retail
sales centers opened during the quarter compared to the prior year and costs
incurred in connection with sales centers scheduled to open in future quarters.
New retail sales centers typically require a period of several months to reach
unit sales levels similar to existing outlets.
Financial services selling, general and administrative expenses rose 44%
on a 26% increase in the average number of loans serviced during the period, a
49% increase in total credit application volume and a 49% increase in loan
originations. In addition to cost increases associated with higher origination
and servicing volume, financial services general and administrative expenses
have increased as a result of allocation to this business unit of certain direct
operating costs (principally related to telecommunications) formerly absorbed by
the parent company and allocated to non-financial operations.
No provision for losses on credit sales was recorded in the third
quarter of fiscal 1996. The Company provides for estimated losses based on the
Company's historical loss experience, current repossession trends and costs and
management's assessment of the current credit quality of the loan portfolio.
Financial services interest expense includes interest expense associated
with long-term debt secured by loans and interest associated with short-term
line of credit borrowings used to fund the warehousing of loans prior to their
securitization. Financial services interest expense decreased 28%, due primarily
to a 47% decrease in interest on long-term debt due to declining and retired
long-term debt balances. Financial services interest expense associated with
notes and bonds payable is expected to continue to decline as the Company
retires its outstanding debt secured by loans. In addition, short-term interest
expense decreased 8% reflecting a reduction in the short-term interest rates on
the Company's line of credit and new commercial paper facilities.
The Company's effective income tax rate was 39.1% in fiscal 1996
compared to the pro forma effective tax rate of 38.5% in fiscal 1995. The
increase in the effective tax rate is due primarily to higher state income
taxes.
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Nine months ended June 30, 1996 compared to nine months ended June 30, 1995
The following table summarizes certain key statistics for the nine
months ended June 30, 1996 and 1995 :
1996 1995
Retail sales (in millions) $484.9 $372.5
Wholesale sales (in millions) 107.2 142.4
Other sales - principally relating to
communities (in millions) 14.7 7.8
Total sales (in millions) 606.8 522.7
Gross profit % - integrated operations 31.5 % 29.4 %
Gross profit % - wholesale operations 17.0 % 18.0 %
New single-section homes sold - retail 9,834 8,647
New multi-section homes sold - retail 4,304 3,007
Used homes sold - retail 1,421 1,439
New single-section homes sold - wholesale 1,104 1,752
New multi-section homes sold - wholesale 3,027 3,788
Average new single-section sales price - retail $27,300 $25,700
Average new multi-section sales price - retail $47,500 $46,200
Average new single-section sales price - wholesale $14,000 $14,000
Average new multi-section sales price - wholesale $29,800 $31,000
Weighted average retail sales centers
open during the period 226 174
Average new home sales per sales center 62.6 67.0
Retail sales dollar volume increased 30%, reflecting a 21% increase in
new unit volume and increases of 6% and 3% in the average new unit sales prices
of single-section and multi-section homes, respectively. New unit volume rose
primarily due to a 30% increase in the weighted average number of sales centers
open during the period. While average new unit sales per sales center decreased
7%, average dollar sales per center increased slightly, principally due to the
increased significance of multi-section homes in the retail unit mix. In the
first nine months of fiscal 1996, the Company opened or acquired 48 new sales
centers compared to 36 sales centers in the first nine months of fiscal 1995.
Because the Company plans to open approximately 45 to 50 new sales centers
annually over the next several years, management does not expect any significant
increase in the average number of new homes sold per sales center over the near
term. Total new retail sales dollars at sales centers open more than one year
rose 6% in the period, while same store unit sales declined .4%. Retail sales of
multi-section homes accounted for 30% of new home unit sales in the first nine
months of fiscal 1996 versus 26% in the prior year.
Wholesale sales dollar volume (which represents sales by Golden West and
Destiny to independent dealers) declined by 25%, primarily due to lower unit
volume. The decline in wholesale unit volume reflects execution of the Company's
strategy of changing the distribution of products produced by Golden West and
Destiny from independent dealers to company- owned retail sales centers. During
the nine months ended June 30, 1996, approximately 29% of Golden West's and
Destiny's shipments were to Oakwood sales centers, compared to 6% in the first
nine months of fiscal 1995; these shipments to Oakwood retail centers are not
included in the wholesale dollar sales and unit sales in the table above. In
addition, Golden West's total
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shipments declined 13% due to the closing of the Sacramento facility during the
third quarter of 1995. Although the Sacramento capacity was replaced with a new
line at the Albany, Oregon plant, its shipments were not fully replaced due to
the ramp up of production during the start-up phase as well as soft market
conditions in the Pacific Northwest.
Gross profit margin - integrated operations reflects gross profit earned
on all sales at retail as well as the manufacturing gross profit on retail sales
of units manufactured by the Company. Gross profit margin - integrated
operations was 31.5% in the current period compared to 29.4% in the prior year.
The increase primarily reflects improved sourcing of retail unit sales from
company-owned manufacturing plants. Approximately 89% of the total new unit
retail sales volume was manufactured by the Company in the first nine months of
fiscal 1996, compared to 75% one year ago.
Wholesale gross profit margins decreased to 17.0% in the current period
from 18.0% last year, primarily due to start-up costs incurred in a plant
expansion at the Albany, Oregon facility, which increased capacity by
approximately 40% during the first quarter. During the first nine months of
fiscal 1996, production at Golden West's Albany plant rose 26% from the level in
the first nine months of fiscal 1995, and the plant operated at 75% of newly
increased capacity. Utilization at the Perris, California plant increased during
the period to 76% from 63% last year, principally as the result of producing new
models for Oakwood retail centers.
Financial services income increased 53% to $68.6 million from $45.0
million last year. Interest income earned on loans held for investment and on
loans held for sale prior to securitization decreased to $25.5 million for the
first nine months of fiscal 1996 from $28.3 million in the prior year. Interest
on loans held for investment declined due to normal amortization and
prepayments, but was partially offset by an increase in interest on loans held
for sale due to higher average outstanding balances during fiscal 1996 versus
the prior year. Loan servicing fees increased from $8.9 million for the first
nine months of 1995 to $11.4 million for the same period in 1996, reflecting the
increased size of the Company's securitized loan servicing portfolio. REMIC
residual income increased from $4.6 million to $12.0 million, reflecting the
shift in the Company's financing strategy toward more frequent securitization of
its loans from holding loans for investment.
Financial services income for the first nine months of fiscal 1996 and
1995 also includes gains of approximately $15.0 million and $776,000,
respectively, from the sale of asset-backed securities. The substantially
increased gains in 1996 resulted from a widening of the excess servicing spread
in two securitizations due to the bond market rally which continued into
mid-February, improved credit ratings assigned to the securities sold, and a
reduction in the credit spread over treasurys demanded by purchasers of the
securities. In addition, the Company's increasing sales of multi-section homes
has resulted in multi-section loans comprising a larger percentage of the assets
sold. Multi-section loans have longer average terms and lower anticipated credit
losses than loans for single-section homes, which contributes to the value of
the residual interest in the securitization. Finally, the Company has
experienced a continuing decline in its transaction costs, reflecting
competitive conditions on Wall Street and the Company's increased experience in
securitizing loans in the public market. Except for the spread widening
resulting from the bond market rally, which will recur irregularly, management
believes that the other factors giving rise to the gain will continue to affect
its future securitizations on a regular basis, and accordingly believes that
gains on asset securitizations will be a recurring element of the Company's
earnings stream. In addition to the gains recorded on the closing dates of
securitizations, the Company expects to earn future income from its
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investment in the residual REMIC interest in these transactions, consistent with
its securitizations closed in prior years. The first nine months of fiscal 1996
also include a $1.4 million nonrecurring gain on the resecuritization of
approximately $32 million of subordinated REMIC securities.
Non-financial services selling, general and administrative expenses rose
to 24.2% of net sales compared to 22.3% of net sales last year. As described in
the quarterly discussion above, the majority of the increase in these expenses
as a percentage of sales relates to the increased percentage of homes produced
by Destiny and Golden West which are being sold through the Oakwood retail
network and the corresponding decline in wholesale sales. Although this strategy
impacts gross margin positively, it also increases non-financial selling,
general and administrative expenses as a percentage of net sales as Destiny and
Golden West costs are increasingly spread over the Oakwood retail sales base.
Non-financial selling, general and administrative expenses have also risen as a
result of increased accruals for long-term management incentive compensation
payable based upon the level of Company profitability for fiscal 1994 through
1996, costs associated with the increased number of new sales centers opened
during fiscal 1996 and expenses related to sales centers which have not yet
opened.
Financial services selling, general and administrative expenses rose 56%
on a 25% increase in the average number of loans serviced during the period, a
60% increase in total credit application volume and a 47% increase in loan
originations. As described in the quarterly discussion above, certain direct
operating costs previously absorbed by the parent company are now being
allocated to financial services operations.
No provision for losses on credit sales was recorded in the first nine
months of fiscal 1996, reflecting the increased seasoning on loans held for
investment and loans sold with full or limited recourse. The Company provides
for estimated losses based on the Company's historical loss experience, current
repossession trends and costs and management's assessment of the current credit
quality of the loan portfolio.
Financial services interest expense includes interest expense associated
with long-term debt secured by loans and interest associated with short-term
line of credit borrowings used to fund the warehousing of loans prior to their
securitization. Financial services interest expense decreased 8%, reflecting a
$3.6 million decrease in interest on long-term debt due to declining and retired
long-term debt balances. This decrease was offset by a $2.1 million increase in
short-term interest due to significant increases in loan volume. Financial
services interest expense associated with notes and bonds payable is expected to
continue to decline as the Company retires its outstanding debt secured by
loans.
The Company's effective income tax rate was 39.0% in fiscal 1996
compared to the pro forma effective tax rate of 38.4% in fiscal 1995. The
increase in the effective tax rate is due primarily to higher state income
taxes.
LIQUIDITY AND CAPITAL RESOURCES
Receivables and investments decreased from September 30, 1995 primarily
due to the timing of the Company's securitization of loans held for sale, as
well as the continued amortization of loans held for investment. The Company
originates loans and warehouses them until sufficient receivables have been
accumulated for a securitization.
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Through its Oakwood Mortgage Investors ("OMI") subsidiary, the Company closed
securitizations in October and February totaling approximately $350 million. The
Company also closed a private securitization of $101 million in May and a third
securitization of $215 million through OMI in July.
Short-term borrowings principally reflect outstanding advances on the
Company's warehousing facility used to finance originated loans prior to
securitization or other permanent financing. Management believes that permanent
financing for its installment sale contracts remains readily available and
anticipates securitizing installment sale contracts using REMICs approximately
every three to four months.
Management believes that the availability of permanent financing for
originated loans, short-term credit facilities and cash generated by operations
are sufficient to provide for the Company's short-term liquidity needs. The
Company is in the process of renegotiating its $75 million line of credit to
$125 million.
Management currently believes that it can obtain the cash it needs to
continue its planned expansion through internally generated funds. However, the
Company continues to monitor the credit and equity markets and evaluate the
sources and costs of the long-term capital required to finance the demands of
both planned expansion and higher operating levels within existing operations.
The Company will seek to raise additional equity or long-term debt based upon
anticipated business demands, management's assessment of existing and future
conditions in the capital markets, and management's assessment of the
appropriate components of the Company's capital structure. In order to maintain
maximum flexibility in the timing of any acquisition of permanent or long-term
financing, the Company intends to focus on maintaining its short-term liquidity.
As a consequence, the Company intends to sell all the regular REMIC interests in
its securitizations, and retain only REMIC residual interests.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
(4) Agreement to Furnish Copies of Instruments
with Respect to Long-term Debt
(10.1) Oakwood Homes Corporation Key Employee Stock Plan, as
amended July 23, 1996
(10.2) Oakwood Homes Corporation Executive Incentive
Compensation Plan, as amended July 23, 1996
(10.3) Form of Long-Term Incentive Compensation Award
Agreement dated November 15, 1995
(10.4) Schedule identifying omitted Long-Term Incentive
Compensation Award Agreements which are substantially
identical to the Form of Long-Term Incentive
Compensation Award Agreement and the percentage
participation under the Long-Term Incentive Compensation
Award Agreements
(11) Statement re Computation of Earnings Per Share
(27) Financial Data Schedule (filed in electronic
format only)
b) Reports on Form 8-K
No reports on Form 8-K were filed for the quarter ended June 30,
1996.
Items 1, 2, 3, 4 and 5 are inapplicable and are omitted.
15
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OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Date: August 14, 1996
OAKWOOD HOMES CORPORATION
BY: s/ C. Michael Kilbourne
C. Michael Kilbourne
Executive Vice President
(Chief Financial Officer)
(Duly Authorized Officer)
16
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
ITEM 6(a)
FORM 10-Q
QUARTERLY REPORT
For the quarter ended Commission File Number
June 30, 1996 1-7444
OAKWOOD HOMES CORPORATION
EXHIBIT INDEX
Exhibit No. Exhibit Description
4 Agreement to Furnish Copies of Instruments with
respect to Long-Term Debt
10.1 Oakwood Homes Corporation Key Employee Stock Plan,
as amended July 23, 1996
10.2 Oakwood Homes Corporation Executive Incentive
Compensation Plan, as amended July 23, 1996
10.3 Form of Long-Term Incentive Compensation Award
Agreement dated November 15, 1995
10.4 Schedule identifying omitted Long-Term Incentive
Compensation Award Agreements which are substantially
identical to the Form of Long-Term Incentive
Compensation Award Agreement and the percentage
participation under the Long-Term Incentive
Compensation Award Agreements
11 Statement re Computation of Earnings Per Share
27 Financial Data Schedule (filed in electronic format only)
17
EXHIBIT 4
AGREEMENT TO FURNISH COPIES OF INSTRUMENTS
WITH RESPECT TO LONG-TERM DEBT
The Registrant has entered into certain agreements with respect to
long-term indebtedness which do not exceed ten percent of the total assets of
the Registrant and its subsidiaries on a consolidated basis. The Registrant
hereby agrees to furnish a copy of such agreements to the Commission upon
request of the Commission.
OAKWOOD HOMES CORPORATION
By: s/ C. Michael Kilbourne
C. Michael Kilbourne
Executive Vice President
18
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EXHIBIT 10.1
Oakwood Homes Corporation
Key Employee Stock Plan
Effective Date: November 15, 1995
As Amended July 23, 1996
<PAGE>
Contents
Page
Article 1. Establishment, Purpose, and Duration 1
Article 2. Definitions 1
Article 3. Administration 5
Article 4. Shares Subject to the Plan 6
Article 5. Eligibility and Participation 7
Article 6. Stock Options 7
Article 7. Stock Appreciation Rights 9
Article 8. Restricted Stock 11
Article 9. Performance Shares 12
Article 10. Performance Measures 13
Article 11. Beneficiary Designation 14
Article 12. Deferrals 14
Article 13. Rights of Key Employees 14
Article 14. Change in Control 14
Article 15. Amendment, Modification, and Termination 17
Article 16. Withholding 17
Article 17. Indemnification 18
Article 18. Successors 18
Article 19. Legal Construction 18
<PAGE>
Oakwood Homes Corporation
Key Employee Stock Plan
Article 1. Establishment, Purpose, and Duration
1.1 Establishment of the Plan. Oakwood Homes Corporation, a
North Carolina corporation (hereinafter referred to as the
"Company"), hereby establishes an incentive compensation plan to be
known as the "Oakwood Homes Corporation Key Employee Stock Plan"
(hereinafter referred to as the "Plan"), as set forth in this
document. The Plan permits the grant of Nonqualified Stock Options,
Incentive Stock Options, Stock Appreciation Rights, Restricted
Stock, and Performance Shares.
Subject to approval by the Company's shareholders, the Plan shall
become effective as of November 15, 1995 (the "Effective Date") and
shall remain in effect as provided in Section 1.3 hereof. The Plan
shall not become effective unless shareholder approval is obtained.
1.2 Purpose of the Plan. The purpose of the Plan is to
promote the success and enhance the value of the Company by linking
the personal interests of Participants to those of the Company's
shareholders, and by providing Participants with an incentive for
outstanding performance.
The Plan is further intended to provide flexibility to the
Company in its ability to motivate, attract, and retain the
services of Participants upon whose judgment, interest and special
effort the successful conduct of its operation largely is
dependent.
1.3 Duration of the Plan. The Plan shall commence on the
Effective Date, as described in Section 1.1 hereof, and shall
remain in effect, subject to the right of the Board of Directors to
amend or terminate the Plan at any time pursuant to Article 15
hereof, until all Shares subject to it shall have been purchased or
acquired according to the Plan's provisions. However, in no event
may an Award of an ISO be granted under the Plan after November 14,
2005.
Article 2. Definitions
Whenever used in the Plan, the following terms shall have the
meanings set forth below and, when the meaning is intended, the
initial letter of the word is capitalized:
2.1 "Award" means, individually or collectively, a grant
under this Plan of Nonqualified Stock Options, Incentive Stock
Options, Stock Appreciation Rights, Restricted Stock or Performance
Shares.
2.2 "Award Agreement" means an agreement entered into by the
Company and each Participant setting forth the terms and provisions
applicable to Awards granted under this Plan.
2.3 "Board" or "Board of Directors" means the Board of
Directors of the Company.
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2.4 "Change in Control" of the Company shall have occurred
when any Acquiring Person (other than the Company, any employee
benefit plan of the Company, or any person or entity organized,
appointed or established by the Company for or pursuant to the
terms of any such plan), alone or together with its Affiliates and
Associates, shall become the beneficial owner of 25% or more of the
shares of Common Stock of the Company then outstanding (except
pursuant to an offer for all outstanding shares of the Company's
Common Stock at a price and upon such terms and provisions as a
majority of the Continuing Directors determine to be in the best
interests of the Company and its shareholders [other than the
Acquiring Person or any Affiliate or Associate thereof on whose
behalf the offer is being made]), and the Continuing Directors no
longer constitute a majority of the Board. For purposes of this
definition, the following terms shall have the following meanings:
(a) "Acquiring Person" means any individual, firm,
corporation or other entity who or which, together with
all Affiliates and Associates, shall be the beneficial
owner of a substantial block of the Company's Common
Stock.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 as
promulgated under the Exchange Act.
(c) "Continuing Director" means any individual who is a
member of the Board, while such individual is a member of
the Board, who is not an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, or a
representative or nominee of an Acquiring Person or of
any such Affiliate or Associate, and was a member of the
Board prior to the occurrence of the Change in Control
date; or any successor of a Continuing Director, while
such successor is a member of the Board, and who is not
an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative or nominee of an
Acquiring Person or of any such Affiliate or Associate,
and is recommended or elected to succeed the Continuing
Director by a majority of the Continuing Directors.
2.5 "Code" means the Internal Revenue Code of 1986, as
amended from time to time. References to the Code shall include
the valid and binding governmental regulations, court decisions and
other regulatory and judicial authority issued or rendered
thereunder.
2.6 "Committee" means the Compensation Committee of the
Board, as specified in Article 3 herein, appointed by the Board to
administer the Plan with respect to grants of Awards.
2.7 "Common Stock" means the common stock of the Company.
2.8 "Company" means Oakwood Homes Corporation, a North
Carolina corporation, and any successor as provided in Article 18
herein.
2.9 "Director" means any individual who is a member of the
Board of Directors of the Company.
2
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2.10 "Disability" with respect to a Participant, means
"disability" as defined from time to time under any long-term
disability plan of the Company or Subsidiary with which the
Participant is employed.
2.11 "Earnings Per Share" means "earnings per common share" of
the Company determined in accordance with generally accepted
accounting principles that would be reported in the Company's
Annual Report to Shareholders.
2.12 "Effective Date" shall have the meaning ascribed to such
term in Section 1.1 hereof.
2.13 "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, or any successor act thereto.
2.14 "Fair Market Value" with respect to a share of the
Company's Common Stock at a particular time, shall be that value as
determined by the Committee which shall be (i) if such Common Stock
is listed on a national securities exchange, on any given date, (A)
the average of the highest and lowest market prices of shares of
Common Stock, as reported on the consolidated transaction reporting
system for such exchange for that date, or if shares of Common
Stock were not traded on such date, on the next preceding day on
which shares of Common Stock were traded, or (B) if the Common
Stock is not reported on the consolidated transaction reporting
system for such exchange, the mean between the highest price and
the lowest price at which the Common Stock shall have been sold
regular way on a national securities exchange on said date, or, if
no sales occur on said date, then on the next preceding date on
which there were such sales of Common Stock; or (ii) if the Common
Stock shall not be listed on a national securities exchange, the
mean between the average high bid and low asked prices last
reported by the National Association of Securities Dealers, Inc.
for the over-the-counter market on said date or, if no bid and
asked prices are reported on said date, then on the next preceding
date on which there were such quotations; or (iii) if at any time
quotations for the Common Stock shall not be reported by the
National Association of Securities Dealers, Inc. for the
over-the-counter market and the Common Stock shall not be listed on
any national securities exchange, the fair market value determined
by the Committee on the basis of available prices for such Common
Stock or in such other manner as the Committee may deem reasonable.
2.15 "Freestanding SAR" means an SAR that is granted
independently of any Options.
2.16 "Incentive Stock Option" or "ISO" means an option to
purchase Shares, granted under Article 6 herein, and which is
designated as an Incentive Stock Option which is intended to meet
the requirements of Section 422 of the Code.
2.17 "Insider" shall mean an individual who is, on the relevant
date, an officer, director or ten percent (10%) beneficial owner of
any class of the Company's equity securities that is registered
pursuant to Section 12 of the Exchange Act, all as defined under
Section 16 of the Exchange Act.
3
<PAGE>
2.18 "Key Employee" means an employee of the Company, including
an officer of the Company, in a managerial or other important
position who can make important contributions to the Company, all
as determined by the Committee in its discretion.
2.19 "Named Executive Officer" means, for a calendar year, a
Participant who is one of the group of "covered employees" for such
calendar year within the meaning of Code Section 162(m) or any
successor statute.
2.20 "Net Income" means "net income" of the Company determined
in accordance with generally accepted accounting principles that
would be reported in the Company's Annual Report to Shareholders.
2.21 "Nonqualified Stock Option" or "NQSO" means an option to
purchase Shares granted to Key Employees under Article 6 herein,
and which is not intended to meet the requirements of Code Section
422.
2.22 "Option" means an Incentive Stock Option or a Nonqualified
Stock Option.
2.23 "Option Price" means the price at which a Share may be
purchased by a Participant pursuant to an Option.
2.24 "Participant" means a Key Employee who has outstanding an
Award granted under the Plan.
2.25 "Performance-Based Exception" means the performance-based
exception set forth in Code Section 162(m)(4)(C) from the
deductibility limitations of Code Section 162(m).
2.26 "Performance Share" means an Award granted to a Key
Employee, as described in Article 9 herein.
2.27 "Period of Restriction" means the period during which the
transfer of Shares of Restricted Stock is limited in some way
(based on the passage of time, the achievement of performance
goals, or upon the occurrence of other events as determined by the
Committee, at its discretion), and the Shares are subject to a
substantial risk of forfeiture, as provided in Article 8 herein.
2.28 "Restricted Stock" means an Award granted to a Participant
pursuant to Article 8 herein.
2.29 "Return on Assets" means "return on average assets" of the
Company determined in accordance with generally accepted accounting
principles that would be reported in the Company's Annual Report to
Shareholders.
2.30 "Return on Equity" means "return on average common
shareholders' equity" of the Company determined in accordance with
generally accepted accounting principles that would be reported in
the Company's Annual Report to Shareholders.
4
<PAGE>
2.31 "Revenues" means the "revenues" of the Company determined
in accordance with generally accepted accounting principles that
would be reported in the Company's Annual Report to Shareholders.
2.32 "Shares" means the shares of Common Stock of the Company.
2.33 "Stock Appreciation Right" or "SAR" means an Award, granted
alone or in connection with a related Option, designated as an SAR,
pursuant to the terms of Article 7 herein.
2.34 "Subsidiary" means any corporation, partnership, joint
venture, affiliate, or other entity in which the Company has an
ownership interest, and which the Committee designates as a
participating entity in the Plan.
2.35 "Tandem SAR" means an SAR that is granted in connection
with a related Option, the exercise of which shall require
forfeiture of the right to purchase a Share under the related
Option (and when a Share is purchased under the Option, the Tandem
SAR shall similarly be canceled).
2.36 "Total Shareholder Return" means the percentage change in
value of an initial investment in Shares over a specified period
assuming reinvestment of all dividends during the period.
Article 3. Administration
3.1 The Committee. The Plan shall be administered by the
Compensation Committee of the Board or by any other Committee
appointed by the Board consisting of not less than two (2)
Directors. All of the members of the Committee shall comply with
the "disinterested administration" rules of Rule 16b-3 under the
Exchange Act, if applicable. The members of the Committee shall be
appointed from time to time by, and shall serve at the discretion
of, the Board of Directors. In addition, any action taken with
respect to Named Executive Officers for purposes of meeting the
Performance-Based Exception shall be taken by the Committee only if
all of the members of the Committee are "outside directors" within
the meaning of Code Section 162(m), subject to any applicable
transition rules under Code Section 162(m). If all of the members
of the Committee are not "outside directors," such action shall be
taken by a subcommittee of the Committee comprised of at least two
(2) members who are "outside directors."
3.2 Authority of the Committee. Except as limited by law, or by
the Articles of Incorporation or Bylaws of the Company, and subject
to the provisions herein, the Committee shall have full power to
select Key Employees who shall participate in the Plan; determine
the sizes and types of Awards; determine the terms and provisions
of Awards in a manner consistent with the Plan; construe and
interpret the Plan and any agreement or instrument entered into
under the Plan; establish, amend, or waive rules and regulations
for the Plan's administration; and (subject to the provisions of
Article 15 herein), amend the terms and provisions of any
outstanding Award to the
5
<PAGE>
extent such terms and provisions are within the discretion of the
Committee as provided in the Plan. Further, the Committee shall
make all other determinations which may be necessary or advisable
for the administration of the Plan. To the extent permitted by law,
the Committee may delegate its authority hereunder.
3.3 Decisions Binding. All determinations and decisions made by
the Committee pursuant to the provisions of the Plan and all
related orders and resolutions of the Board shall be final,
conclusive and binding on all persons, including the Company, its
shareholders, employees, Participants, and their estates and
beneficiaries.
Article 4. Shares Subject to the Plan
4.1 Number of Shares Available for Grants. Beginning on the
Effective Date, there is hereby reserved for grants of Awards under
the Plan a number of Shares equal to:
(a) one million (1,000,000) Shares; plus
(b) one and one-half percent (1.5%) of the outstanding Shares
as of October 1, 1995 and each subsequent October 1.
Such Shares available for grants of Awards in any year shall be
increased by the number of Shares available under this Section 4.1
in previous years but not covered by Awards granted under this Plan
in those years plus any Shares as to which Awards granted under
this Plan have lapsed, expired, terminated, or been canceled. The
number of Shares reserved for grants of Awards under this Section
4.1 shall be subject to adjustment as provided in Section 4.3.
In no event shall a Participant receive an Award or Awards of
Options, Freestanding SARs, Restricted Stock or Performance Shares
during any one (1) calendar year covering in the aggregate more
than Two Hundred Fifty Thousand (250,000) Shares.
4.2 Lapsed Awards. If any Award granted under this Plan is
canceled, terminates, expires, or lapses for any reason (with the
exception of the termination of a Tandem SAR upon exercise of the
related Option, or the termination of a related Option upon
exercise of the corresponding Tandem SAR), any Shares subject to
such Award again shall be available for the grant of an Award under
the Plan.
4.3 Adjustments in Authorized Shares. In the event of any
change in corporate capitalization, such as a stock split, or a
corporate transaction, such as any merger, consolidation,
separation, including a spin-off, or other distribution of stock or
property of the Company, any reorganization (whether or not such
reorganization comes within the definition of such term in Code
Section 368) or any partial or complete liquidation of the Company,
such adjustment shall be made in the number and class of Shares
which may be delivered under the Plan, and in the number and class
of and/or price of Shares subject to outstanding Awards granted
under the Plan, as may be determined to be appropriate and
equitable by the
6
<PAGE>
Committee, in its sole discretion, to prevent dilution or
enlargement of rights; provided, however, that the number of Shares
subject to any Award shall always be a whole number.
Article 5. Eligibility and Participation
5.1 Eligibility. Persons eligible to participate in this Plan
are all Key Employees of the Company, as determined by the
Committee, including Key Employees who are Directors, but excluding
Directors who are not Key Employees.
5.2 Actual Participation. Subject to the provisions of the
Plan, the Committee may, from time to time, select from all
eligible Key Employees those to whom Awards shall be granted and
shall determine the nature and amount of each Award.
Article 6. Stock Options
6.1 Grant of Options. Subject to the terms and provisions of
the Plan, Options may be granted to Key Employees in such number,
and upon such terms, and at any time and from time to time as shall
be determined by the Committee.
6.2 Award Agreement. Each Option grant shall be evidenced by an
Award Agreement that shall specify the Option Price, the duration
of the Option, the number of Shares to which the Option pertains,
and such other provisions as the Committee shall determine. The
Award Agreement also shall specify whether the Option is intended
to be an ISO within the meaning of Section 422 of the Code, or an
NQSO whose grant is intended not to fall under Code Section 422.
6.3 Option Price. The Committee shall determine the Option
Price for each grant of an Option under this Plan, which such
Option Price (i) shall not be less than the Fair Market Value of a
Share on the date of grant and (ii) shall be set forth in the
applicable Award Agreement.
6.4 Duration of Options. Each Option shall expire at such time
as the Committee shall determine at the time of grant; provided,
however, that no Option shall be exercisable later than the tenth
(10th) anniversary date of its grant.
6.5 Exercise of Options. Options granted under this Article 6
shall be exercisable at such times and be subject to such
restrictions and conditions as the Committee shall in each instance
approve and which shall be set forth in the applicable Award
Agreement, which need not be the same for each grant or for each
Participant.
6.6 Payment. Options shall be exercised by the delivery of a
written notice of exercise to the Company, setting forth the number
of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares.
The Option Price upon exercise of any Option shall be payable to
the Company in full either: (a) in cash or its equivalent, or (b)
by tendering previously acquired Shares having an aggregate Fair
Market Value at the time of exercise equal to the total
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<PAGE>
Option Price (provided that the Shares which are tendered must have
been held by the Participant for at least six (6) months prior to
their tender to satisfy the Option Price), or (c) by a combination
of (a) and (b).
The Committee also may allow cashless exercise as permitted
under Federal Reserve Board's Regulation G or Regulation T, subject
to applicable securities law restrictions, or by any other means
which the Committee determines to be consistent with the Plan's
purpose and applicable law.
As soon as practicable after receipt of a written notification
of exercise and full payment, the Company shall deliver to the
Participant, in the Participant's name, Share certificates in an
appropriate amount based upon the number of Shares purchased under
the Option(s).
6.7 Restrictions on Share Transferability. The Committee may
impose such restrictions on any Shares acquired pursuant to the
exercise of an Option granted under this Article 6 as it may deem
advisable, including, without limitation, restrictions under
applicable Federal securities laws, under the requirements of any
stock exchange or market upon which such Shares are then listed
and/or traded, and under any blue sky or state securities laws
applicable to such Shares.
6.8 Termination of Employment. Each Participant's Option Award
Agreement shall set forth the extent to which the Participant shall
have the right to exercise the Option following termination of the
Participant's employment with the Company and its Subsidiaries.
Such provisions shall be determined in the sole discretion of the
Committee, shall be included in the Award Agreement entered into
with Participants, need not be uniform among all Options issued
pursuant to this Article 6, may reflect distinctions based on the
reasons for termination of employment and may include provisions
relating to the Participant's competition with the Company after
termination of employment. In that regard, if an Award Agreement
permits exercise of an Option following the death of the
Participant, the Award Agreement shall provide that such Option
shall be exercisable to the extent provided therein by any person
that may be empowered to do so under the Participant's will, or if
the Participant shall fail to make a testamentary disposition of
the Option or shall have died intestate, by the Participant's
executor or other legal representative.
6.9 Nontransferability of Options.
(a) Incentive Stock Options. No ISO granted under this Article
6 may be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than by
will or by the laws of descent and distribution.
Further, all ISOs granted to a Participant under the
Plan shall be exercisable during his or her lifetime
only by such Participant.
(b) Nonqualified Stock Options. Except as otherwise provided in
a Participant's Award Agreement, no NQSO granted under
this Article 6 may be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and
distribution.
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Further, except as otherwise provided in a
Participant's Award Agreement, all NQSOs granted to a
Participant under this Article 6 shall be exercisable
during his or her lifetime only by such Participant.
6.10 No Rights. A Participant granted an Option shall have no
rights as a shareholder of the Company with respect to the Shares
covered by such Option except to the extent that Shares are issued
to the Participant upon the due exercise of the Option.
Article 7. Stock Appreciation Rights
7.1 Grant of SARs. Subject to the terms and provisions of the
Plan, SARs may be granted to Key Employees at any time and from
time to time as shall be determined by the Committee. The Committee
may grant Freestanding SARs, Tandem SARs, or any combination of
these forms of SAR.
The Committee shall have complete discretion in determining the
number of Shares covered by SARs granted hereunder (subject to
Article 4 herein) and, consistent with the provisions of the Plan,
in determining the terms and provisions pertaining to such SARs.
The number of Shares covered by a Freestanding SAR shall be counted
against the number of Shares available for grants of Awards under
Section 4.1, but the number of Shares covered by a Tandem SAR shall
not be so counted.
The grant price of a Freestanding SAR shall equal the Fair
Market Value of a Share on the date of grant of the SAR. The grant
price of Tandem SARs shall equal the Option Price of the related
Option.
7.2 Exercise of Tandem SARs. Tandem SARs may be exercised for
all or part of the Shares subject to the related Option upon the
surrender of the right to exercise the equivalent portion of the
related Option. A Tandem SAR may be exercised only with respect to
the Shares for which its related Option is then exercisable.
Notwithstanding any other provision of this Plan to the
contrary, with respect to a Tandem SAR granted in connection with
an ISO: (i) the Tandem SAR will expire no later than the expiration
of the underlying ISO; (ii) the value of the payout with respect to
the Tandem SAR may be for no more than one hundred percent (100%)
of the difference between the Option Price of the underlying ISO
and the Fair Market Value of the Shares subject to the underlying
ISO at the time the Tandem SAR is exercised; and (iii) the Tandem
SAR may be exercised only when the Fair Market Value of the Shares
subject to the ISO exceeds the Option Price of the ISO.
7.3 Exercise of Freestanding SARs. Freestanding SARs may be
exercised upon whatever terms and provisions the Committee, in its
sole discretion, imposes upon them.
7.4 SAR Agreement. Each SAR grant shall be evidenced by an
Award Agreement that shall specify the grant price, the term of the
SAR, and such other provisions as the Committee shall determine.
9
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7.5 Term of SARs. The term of an SAR granted under the Plan
shall be determined by the Committee, in its sole discretion;
provided, however, that such term shall not exceed ten (10) years.
7.6 Payment of SAR Amount. Upon exercise of an SAR, a
Participant shall be entitled to receive payment from the Company
in an amount determined by multiplying:
(a) The difference between the Fair Market Value of a Share on
the date of exercise over the grant price; by
(b) The number of Shares with respect to which the SAR is
exercised.
At the discretion of the Committee, the payment upon SAR
exercise may be in cash, in Shares of equivalent value, or in some
combination thereof; provided, however, that from and after the
date of a Change in Control, the exercise of an SAR may be settled
only in cash.
7.7 Rule 16b-3 Requirements. Notwithstanding any other
provision of the Plan, the Committee may impose such conditions on
exercise of an SAR (including, without limitation, the right of the
Committee to limit the time of exercise to specified periods) as
may be required to satisfy the requirements of Section 16 (or any
successor provision) of the Exchange Act.
7.8 Termination of Employment. Each SAR Award Agreement shall
set forth the extent to which the Participant shall have the right
to exercise the SAR following termination of the Participant's
employment with the Company and its Subsidiaries. Such provisions
shall be determined in the sole discretion of the Committee, shall
be included in the Award Agreement entered into with Participants,
need not be uniform among all SARs issued pursuant to the Plan, and
may reflect distinctions based on the reasons for termination of
employment. In that regard, if an Award Agreement permits exercise
of an SAR following the death of the Participant, the Award
Agreement shall provide that such SAR shall be exercisable to the
extent provided therein by any person that may be empowered to do
so under the Participant's will, or if the Participant shall fail
to make a testamentary disposition of the SAR or shall have died
intestate, by the Participant's executor or other legal
representative.
7.9 Nontransferability of SARs. Except as otherwise provided in
a Participant's Award Agreement, no SAR granted under the Plan may
be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. Further, except as otherwise provided in a
Participant's Award Agreement, all SARs granted to a Participant
under the Plan shall be exercisable during his or her lifetime only
by such Participant.
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7.10 No Rights. A Participant granted an SAR shall have no
rights as a shareholder of the Company with respect to the Shares
covered by such SAR except to the extent that Shares are issued to
the Participant upon the due exercise of the SAR.
Article 8. Restricted Stock
8.1 Grant of Restricted Stock. Subject to the terms and
provisions of the Plan, the Committee, at any time and from time to
time, may grant Shares of Restricted Stock to eligible Key
Employees in such amounts as the Committee shall determine.
8.2 Restricted Stock Award Agreement. Each Restricted Stock
grant shall be evidenced by a Restricted Stock Award Agreement that
shall specify the Period of Restriction, or Periods, the number of
Shares of Restricted Stock granted, and such other provisions as
the Committee shall determine. Notwithstanding any provision of the
Plan to the contrary, no grant of Restricted Stock under this Plan
shall have a Period of Restriction of less than three (3) years
except as follows: the Period of Restriction may be less than three
(3) years as the result of the achievement of performance goals or
as part of an award made in conjunction with the EIC Plan as
provided in Section 8.8 below.
8.3 Transferability. Except as provided in this Article 8, the
Shares of Restricted Stock granted herein may not be sold,
transferred, pledged, assigned, or otherwise alienated or
hypothecated until the end of the applicable Period of Restriction
established by the Committee and specified in the Restricted Stock
Award Agreement, or upon earlier satisfaction of any other
conditions, as specified by the Committee in its sole discretion
and set forth in the Restricted Stock Agreement. All rights with
respect to the Restricted Stock granted to a Participant under the
Plan shall be available during his or her lifetime only to such
Participant.
8.4 Other Restrictions. The Committee may impose such other
conditions and/or restrictions on any Shares of Restricted Stock
granted pursuant to the Plan as it may deem advisable including,
without limitation, a requirement that Participants pay a
stipulated purchase price for each Share of Restricted Stock,
restrictions based upon the achievement of specific performance
goals (Company-wide, divisional, and/or individual), time-based
restrictions on vesting following the attainment of the performance
goals, and/or restrictions under applicable Federal or state
securities laws.
The Company shall retain the certificates representing Shares of
Restricted Stock in the Company's possession until such time as all
conditions and/or restrictions applicable to such Shares have been
satisfied.
Except as otherwise provided in this Article 8 or in the
applicable Award Agreement, Shares of Restricted Stock covered by
each Restricted Stock grant made under the Plan shall become freely
transferable by the Participant after the last day of the Period of
Restriction.
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8.5 Voting Rights. During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder
may exercise full voting rights with respect to those Shares.
8.6 Dividends and Other Distributions. During the Period of
Restriction, Participants holding Shares of Restricted Stock
granted hereunder may be credited with regular cash dividends paid
with respect to the underlying Shares while they are so held. The
Committee may apply any restrictions to the dividends that the
Committee deems appropriate.
In the event that any dividend constitutes a "derivative
security" or an "equity security" pursuant to Rule 16(a) under the
Exchange Act, such dividend shall be subject to a vesting period
equal to the remaining vesting period of the Shares of Restricted
Stock with respect to which the dividend is paid.
8.7 Termination of Employment. Each Restricted Stock Award
Agreement shall set forth the extent to which the Participant shall
have the right to receive unvested Restricted Shares following
termination of the Participant's employment with the Company and
its Subsidiaries. Such provisions shall be determined in the sole
discretion of the Committee, shall be included in the Award
Agreement entered into with Participants, need not be uniform among
all Shares of Restricted Stock issued pursuant to the Plan, and may
reflect distinctions based on the reasons for termination of
employment. In amplification but not limitation of the foregoing,
in the case of an award of Restricted Stock to a Named Executive
Officer which is intended to qualify for the Performance-Based
Exception, the Award Agreement may provide that such Restricted
Stock may become payable in the event of a termination of
employment by reason of death, Disability or Change in Control,
such payment not to occur before attainment of the related
performance goal.
8.8 Coordination With Incentive Plan. The Company maintains the
Oakwood Homes Corporation Executive Incentive Compensation Plan
(the "EIC Plan") to provide annual and long-term cash incentives to
certain executive officers of the Company. In accordance with the
EIC Plan, an executive officer receiving a cash award under the EIC
Plan must receive at least 10% of such award, and if and as
determined by the Committee as much as 50% of such award, as Shares
of Restricted Stock, with the number of such Shares determined on a
discount basis that depends on the length of the Period of
Restriction selected by the executive officer. Notwithstanding any
provision of this Plan to the contrary, the Committee shall award
from this Plan any Shares of Restricted Stock to be received by an
executive officer under the EIC Plan as described above, the number
of such Shares and the applicable Period of Restriction to be
determined in accordance with the terms of the EIC Plan and set
forth in an appropriate Award Agreement.
Article 9. Performance Shares
9.1 Grant of Performance Shares. Subject to the terms and
provisions of the Plan, Performance Shares may be granted to
eligible Key Employees in such amount and upon such terms, and at
such time(s), as shall be determined by the Committee.
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The number and/or vesting of Performance Shares granted, in the
Committee's discretion, shall be contingent upon the degree of
attainment of specified performance goals or other conditions over
a specified period (the "Performance Period"). The terms and
provisions of an Award of Performance Shares shall be evidenced by
an appropriate Award Agreement.
9.2 Value of Performance Shares. The value of a Performance
Share at any time shall equal the Fair Market Value of a Share at
such time.
9.3 Form and Timing of Payment of Performance Shares. During
the course of a Performance Period, the Committee shall determine
the number of Performance Shares as to which the Participant has
earned a right to be paid pursuant to the terms of the applicable
Award Agreement. The Committee shall pay any earned Performance
Shares as soon as practicable after they are earned in the form of
cash, Shares or a combination thereof (as determined by the
Committee) having an aggregate Fair Market Value equal to the value
of the earned Performance Shares as of the date they are earned.
Any Shares used to pay out earned Performance Shares may be granted
subject to any restrictions deemed appropriate by the Committee. In
addition, the Committee, in its discretion, may cancel any earned
Performance Shares and grant Stock Options to the Participant which
the Committee determines to be of equivalent value based on a
conversion formula stated in the Performance Shares Award
Agreement.
The Committee, in its discretion, may also grant dividend
equivalents rights with respect to earned but unpaid Performance
Shares as evidenced by the applicable Award Agreement. Performance
Shares shall not have any voting rights.
9.4 Termination of Employment. Each Performance Share Award
Agreement shall set forth the extent to which the Participant shall
have the right to receive unearned Performance Shares following
termination of the Participant's employment with the Company and
its Subsidiaries. Such provisions shall be determined in the sole
discretion of the Committee, shall be included in the Award
Agreements entered into with Participants, need not be uniform
among all Performance Shares awarded pursuant to the Plan, and may
reflect distinctions based on the reasons of termination of
employment. In amplification but not limitation of the foregoing,
in the case of an award of Performance Shares to a Named Executive
Officer which is intended to qualify for the Performance-Based
Exception, the Award Agreement may provide that such Performance
Shares may become payable in the event of a termination of
employment by reason of death, Disability or Change in Control,
such payment not to occur before attainment of the related
performance goal.
9.5 Nontransferability. Except as otherwise provided in a
Participant's Award Agreement, Performance Shares may not be sold,
transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. Further, except as otherwise provided in a
Participant's Award Agreement, a Participant's rights under the
Plan shall be exercisable during the Participant's lifetime only by
the Participant.
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Article 10. Performance Measures
The performance measure(s) to be used for purposes of Awards
(other than Options) to Named Executive Officers which are designed
to qualify for the Performance-Based Exception shall be chosen from
among the following alternatives:
(a) Earnings Per Share;
(b) Net Income;
(c) Return On Assets;
(d) Return On Equity;
(e) Revenues; or
(f) Total Shareholder Return.
In the event that applicable tax and/or securities laws change
to permit Committee discretion to alter the governing performance
measures without obtaining shareholder approval of such changes,
the Committee shall have sole discretion to make such changes
without obtaining shareholder approval.
Article 11. Beneficiary Designation
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Plan is to be paid in
case of his or her death before he or she receives any or all of
such benefit. Each such designation shall revoke all prior
designations by the same Participant, shall be in a form prescribed
by the Company, and will be effective only when filed by the
Participant in writing with the Company during the Participant's
lifetime. In the absence of any such designation, benefits
remaining unpaid at the Participant's death shall be paid to the
Participant's estate.
Article 12. Deferrals
The Committee may permit a Participant to defer such
Participant's receipt of the payment of cash or the delivery of
Shares that would otherwise be due to such Participant by virtue of
the exercise of an Option or SAR, the lapse or waiver of
restrictions with respect to Restricted Stock, or the satisfaction
of any requirements or goals with respect to Performance Shares. If
any such deferral election is required or permitted, the Committee
shall, in its sole discretion, establish rules and procedures for
such payment deferrals.
Article 13. Rights of Key Employees
13.1 Employment. Nothing in the Plan shall interfere with or
limit in any way the right of the Company to terminate any
Participant's employment at any time, nor confer upon any
Participant any right to continue in the employ of the Company. For
purposes of this Plan, a transfer of a Participant's employment
between the Company
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and a Subsidiary, or between Subsidiaries, shall not be deemed to
be a termination of employment.
13.2 Participation. No Key Employee shall have the
right to be selected to receive an Award under this Plan, or,
having been so selected, to be selected to receive a future Award.
Article 14. Change in Control
14.1 Treatment of Outstanding Awards. Upon the occurrence of a
Change in Control, unless otherwise specifically prohibited under
applicable laws, or by the rules and regulations of any governing
governmental agencies or national securities exchanges:
(a) Any and all Options and SARs granted hereunder shall become
immediately exercisable, and shall remain exercisable
throughout their entire term;
(b) Any restriction periods and restrictions imposed on shares
of Restricted Stock shall lapse; and
(c) The target payout opportunities attainable under all
outstanding Awards of Restricted Stock and Performance
Shares shall be deemed to have been fully earned for the
entire Performance Period(s) as of the effective date of the
Change in Control, and the vesting of all Awards shall be
accelerated as of the effective date of the Change in
Control.
14.2 Limitation on Change-in-Control Benefits. It is the
intention of the Company and the Participants to reduce the amounts
payable or distributable to a Participant hereunder if the
aggregate Net After Tax Receipts (as defined below) to the
Participant would thereby be increased, as a result of the
application of the excise tax provisions of Section 4999 of the
Code. Accordingly, anything in this Plan to the contrary
notwithstanding, in the event that the independent accountants
regularly employed by the Company immediately prior to any "change"
described below (the "Accounting Firm") shall determine that
receipt of all Payments (as defined below) would subject the
Participant to tax under Section 4999 of the Code, it shall
determine whether some amount of Payments would meet the definition
of a "Reduced Amount," (as defined below). If the Accounting Firm
determines that there is a Reduced Amount, the aggregate Payments
shall be reduced to such Reduced Amount in accordance with the
provisions of Section 14.2(b) below.
(a) For purposes of this Section 14.2(a):
(i) A "Payment" shall mean any payment or distribution in
the nature of compensation to or for the benefit of a
Participant who is a "disqualified individual" within
the meaning of Section 280G(c) of the Code and which
is contingent on a "change" described in Section
280G(b)(2)(A)(i) of the Code with respect to the
Company, whether paid or payable pursuant to this Plan
or otherwise;
(ii) "Plan Payment" shall mean a Payment paid or payable
pursuant to this Plan (disregarding this Section
14.2);
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(iii) "Net After Tax Receipt" shall mean the Present Value of
a Payment, net of all taxes imposed on the Participant
with respect thereto under Sections 1 and 4999 of the
Code, determined by applying the highest marginal rate
under Section 1 of the Code which applied to the
Participant's Federal taxable income for the
immediately preceding taxable year;
(iv) "Present Value" shall mean such value determined in
accordance with Section 280G(d)(4) of the Code; and
(v) "Reduced Amount" shall mean the smallest aggregate
amount of Payments which (A) is less than the sum of
all Payments and (B) results in aggregate Net After
Tax Receipts which are equal to or greater than the
Net After Tax Receipts which would result if all
Payments were paid to or for the benefit of the
Participant.
(b) If the Accounting Firm determines that aggregate Payments
should be reduced to the Reduced Amount, the Committee
shall promptly give the Participant notice to that effect
and a copy of the detailed calculation thereof, and the
Participant may then elect, in the Participant's sole
discretion, which and how much of the Payments, including
without limitation Plan Payments, shall be eliminated or
reduced (as long as after such election the Present Value
of the aggregate Payments is equal to the Reduced Amount),
and shall advise the Committee in writing of such election
within ten (10) days of the Participant's receipt of
notice. If no such election is made by the Participant
within such ten (10) day period, the Committee may elect
which of the Payments, including without limitation Plan
Payments, shall be eliminated or reduced (as long as after
such election the Present Value of the aggregate Payments
is equal to the Reduced Amount) and shall notify the
Participant promptly of such election. All determinations
made by the Accounting Firm under this Section 14.2 shall
be binding upon the Company and the Participant and shall
be made within sixty (60) days immediately following the
event constituting the "change" referred to above. As
promptly as practicable following such determination, the
Company shall pay to or distribute for the benefit of the
Participant such Payments as are then due to the
Participant under this Plan.
(c) At the time of the initial determination by the Accounting
Firm hereunder, it is possible that amounts will have been
paid or distributed by the Company to or for the benefit of
the Participant pursuant to this Plan which should not have
been so paid or distributed ("Overpayment") or that
additional amounts which will have not been paid or
distributed by the Company to or for the benefit of the
Participant pursuant to this Plan could have been so paid
or distributed ("Underpayment"), in each case, consistent
with the calculation of the Reduced Amount hereunder. In
the event that the Accounting Firm, based either upon the
assertion of a deficiency by the Internal Revenue Service
against the Company or the Participant which the Accounting
Firm believes has a high probability of success or
controlling precedent or other substantial authority,
determines that an Overpayment has been made, any such
Overpayment paid or distributed by the Company to or for
the benefit of the
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Participant shall be treated for all purposes as a loan ab
initio to the Participant which the Participant shall repay
to the Company together with interest at the applicable
Federal rate provided for in Section 7872(f)(2) of the
Code; provided, however, that no such loan shall be deemed
to have been made and no amount shall be payable by the
Participant to the Company if and to the extent such deemed
loan and payment would not either reduce the amount on
which the Participant is subject to tax under Section 1 and
Section 4999 of the Code or generate a refund of such
taxes.
In the event that the Accounting Firm, based upon
controlling precedent or other substantial authority,
determines that an Underpayment has occurred, any such
Underpayment shall be promptly paid by the Company to or
for the benefit of the Participant together with interest
at the applicable Federal rate provided for in Section
7872(f)(2) of the Code.
14.3 Termination, Amendment, and Modifications of
Change-in-Control Provisions. Notwithstanding any other provision
of this Plan or any Award Agreement provision, the provisions of
this Article 14 may not be terminated, amended, or modified on or
after the date of a Change in Control to affect adversely any Award
theretofore granted under the Plan without the prior written
consent of the Participant with respect to said Participant's
outstanding Awards; provided, however, the Board of Directors, upon
recommendation of the Committee, may terminate, amend, or modify
this Article 14 at any time and from time to prior to the date of a
Change in Control.
Article 15. Amendment, Modification, and Termination
15.1 Amendment, Modification, and Termination. The Board may at
any time and from time to time, alter, amend, suspend or terminate
the Plan in whole or in part; provided, however, that no amendment
which requires shareholder approval in order for the Plan to
continue to comply with Rule 16b-3 under the Exchange Act,
including any successor to such Rule, shall be effective unless
such amendment shall be approved by the requisite vote of
shareholders of the Company entitled to vote thereon.
The Committee shall not have the authority to cancel outstanding
Awards and issue substitute Awards in replacement thereof.
15.2 Awards Previously Granted. No termination, amendment, or
modification of the Plan shall adversely affect in any material way
any Award previously granted under the Plan, without the written
consent of the Participant holding such Award.
15.3 Acceleration of Award Vesting; Waiver of Restrictions.
Notwithstanding any provision of this Plan or any Award Agreement
provision to the contrary, the Committee, in its sole and exclusive
discretion, shall have the power at any time to (i) accelerate the
vesting of any Award granted under the Plan, including without
limitation, acceleration to such a date that would result in said
Awards becoming immediately vested, or (ii) waive any restrictions
of any Award granted under the Plan.
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Article 16. Withholding
16.1 Tax Withholding. The Company shall have the power and the
right to deduct or withhold, or require a Participant to remit to
the Company, an amount sufficient to satisfy Federal, state, and
local taxes (including the Participant's FICA obligation) required
by law to be withheld with respect to any taxable event arising as
a result of this Plan.
16.2 Share Withholding. With respect to withholding required
upon the exercise of Options or SARs, upon the lapse of
restrictions on Restricted Stock, or upon any other taxable event
arising as a result of Awards granted hereunder, Participants may
elect, subject to the approval of the Committee, to satisfy the
withholding requirement, in whole or in part, by having the Company
withhold Shares having a Fair Market Value on the date as of which
the tax is to be determined equal to the minimum statutory total
tax which could be imposed on the transaction. All such elections
shall be irrevocable, made in writing, signed by the Participant,
and shall be subject to any restrictions or limitations that the
Committee, in its sole discretion, deems appropriate.
Article 17. Indemnification
Each person who is or shall have been a member of the Committee,
or of the Board, shall be indemnified and held harmless by the
Company against and from any loss, cost, liability, or expense that
may be imposed upon or reasonably incurred by him or her in
connection with or resulting from any claim, action, suit, or
proceeding to which he or she may be a party or in which he or she
may be involved by reason of any action taken or failure to act
under the Plan and against and from any and all amounts paid by him
or her in settlement thereof, with the Company's approval, or paid
by him or her in satisfaction of any judgment in any such action,
suit, or proceeding against him or her, provided he or she shall
give the Company an opportunity, at its own expense, to handle and
defend the same before he or she undertakes to handle and defend it
on his or her own behalf. The foregoing right of indemnification
shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under the Company's Articles of
Incorporation or Bylaws, as a matter of law, or otherwise, or any
power that the Company may have to indemnify them or hold them
harmless.
Article 18. Successors
All obligations of the Company under the Plan with respect to
Awards granted hereunder shall be binding on any successor to the
Company, whether the existence of such successor is the result of a
direct or indirect purchase, merger, consolidation, or otherwise,
of all or substantially all of the business and/or assets of the
Company.
Article 19. Legal Construction
19.1 Gender and Number. Except where otherwise indicated by the
context, any masculine term used herein also shall include the
feminine; the plural shall include the singular and the singular
shall include the plural.
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19.2 Severability. In the event any provision of the Plan shall
be held illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining parts of the Plan, and
the Plan shall be construed and enforced as if the illegal or
invalid provision had not been included.
19.3 Requirements of Law. The granting of Awards and the
issuance of Shares under the Plan shall be subject to all
applicable laws, rules, and regulations, and to such approvals by
any governmental agencies or national securities exchanges as may
be required.
19.4 Securities Law Compliance. With respect to Insiders,
transactions under this Plan are intended to comply with all
applicable conditions or Rule 16b-3 or its successors under the
Exchange Act. To the extent any provision of the plan or action by
the Committee fails to so comply, it shall be deemed null and void,
to the extent permitted by law and deemed advisable by the
Committee.
19.5 Governing Law. To the extent not preempted by Federal law,
the Plan, and all agreements hereunder, shall be construed in
accordance with and governed by the laws of the State of North
Carolina.
19
EXHIBIT 10.2
As Amended July 23, 1996
OAKWOOD HOMES CORPORATION
EXECUTIVE INCENTIVE COMPENSATION PLAN
1. Name:
This plan shall be known as the "Oakwood Homes Corporation
Executive Incentive Compensation Plan" (the "Plan").
2. Purpose and Intent:
Oakwood Homes Corporation (the "Company") establishes this Plan
effective November 15, 1995 for the purpose of providing certain of its
senior executive officers with annual and long-term incentive
compensation based on the performance of the Company measured by certain
objective corporate financial performance criteria described herein. The
intent of the Plan is to provide "performance-based compensation" within
the meaning of Section 162(m)(4)(C) of the Code. The provisions of the
Plan shall be construed and interpreted to effectuate such intent.
3. Definitions:
For purposes of the Plan, the following terms shall have the
following meanings:
(a) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and references thereto shall include the valid
Treasury regulations thereunder.
(b) "Committee" means all of the members of the Compensation
Committee of the Board of Directors of the Company who are Outside
Directors.
(c) "Common Stock" means the common stock of the Company.
(d) "Covered Employee" with respect to a Plan Year or Performance
Period, as applicable, means any key employee of the Company designated
as such by the Committee in accordance with the provisions of paragraphs
5 and 6 below.
(e) "Fair Market Value" of a share of Common Stock means "Fair
Market Value" as defined in the Stock Plan.
(f) "Net Income" means, with respect to a Plan Year, "net income"
of the Company for such Plan Year determined in accordance with
generally accepted accounting principles that would be reported in the
Company's Annual Report to Shareholders for such Plan Year.
(g) "Outside Director" means an "outside director" within the
meaning of Section 162(m)(4)(C)(i) of the Code, subject to any
applicable transition rules under Section 162(m) of the Code.
<PAGE>
(h) "Performance Period" means a period covering more than one (1)
Plan Year established by the Committee in accordance with the provisions
of paragraph 6 below.
(i) "Period of Restriction" means "Period of Restriction" as
defined in the Stock Plan.
(j) "Plan Year" means the fiscal year of the Company beginning
October 1 and ending September 30.
(k) "Pool" means a long term incentive compensation pool
established under the provisions of paragraph 6 pursuant to a formula
based on the level of Net Income for the applicable Performance Period.
(l) "Restricted Stock" means "Restricted Stock" as defined in the
Stock Plan.
(m) "ROE" means, with respect to a Plan Year, the Company's
"return on average common shareholders' equity" for such Plan Year
determined in accordance with generally accepted accounting principles
that would be reported in the Company's Annual Report to Shareholders
for such Plan Year.
(n) "Stock Plan" means the Oakwood Homes Corporation Key Employee
Stock Plan, as the same may be amended from time to time.
4. Administration:
The Committee shall be responsible for administering the Plan. The
Committee shall have all of the powers necessary to enable it to
properly carry out its duties under the Plan. Not in limitation of the
foregoing, the Committee shall have the power to construe and interpret
the Plan and to determine all questions that shall arise thereunder. The
Committee shall have such other and further specified duties, powers,
authority and discretion as are elsewhere in the Plan either expressly
or by necessary implication conferred upon it. The Committee may
appoint such agents, who need not be members of the Committee, as it may
deem necessary for the effective performance of its duties, and may
delegate to such agents such powers and duties as the Committee may deem
expedient or appropriate that are not inconsistent with the intent of
the Plan. The decision of the Committee upon all matters within its
scope of authority shall be final and conclusive on all persons, except
to the extent otherwise provided by law.
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5. Annual Incentive Compensation:
The Plan shall provide for annual incentive compensation
payable in accordance with the provisions of this paragraph 5.
No later than December 30 of a Plan Year, the Committee shall
determine (i) the Covered Employees who are eligible for annual
incentive compensation for the Plan Year under this paragraph 5,
(ii) for each such Covered Employee, a target annual bonus and
(iii) a formula based on the Net Income for such Plan Year
pursuant to which a given Covered Employee shall receive none,
some, all or more than all of such Covered Employee's target
annual bonus depending on the actual Net Income for such Plan
Year. In that regard, the formula for determining the amount of
a Covered Employee's annual incentive compensation under this
paragraph 5, if any, for a Plan Year shall be a fixed formula
that does not permit Committee discretion. Any annual incentive
compensation payable to a Covered Employee under this paragraph 5
shall be paid in accordance with the provisions of paragraph 8.
6. Long Term Incentive Compensation:
The Plan shall provide for long term incentive compensation
payable in accordance with the provisions of this paragraph 6.
No later than December 30 of any Plan Year during the term of
this Plan, the Committee may in its discretion establish a
Performance Period consisting of such Plan Year and one or more
succeeding Plan Years. If a Performance Period is established,
then at the time such Performance Period is established the
Committee shall determine (i) the Covered Employees who are
eligible for long term incentive compensation for the Performance
Period under this paragraph 6, (ii) a formula for determining a
Pool based on the Net Income of the Company for the Performance
Period, (iii) a threshold level of ROE for the Performance Period
below which no Pool shall be established and (iv) a formula for
allocating among the Covered Employees for a Performance Period
any Pool for such Performance Period. In that regard, (A) the
formula for determining the amount of the Pool for a Performance
Period and (B) the formula for allocating any Pool among the
Covered Employees for the Performance Period shall be fixed
formulas that do not permit Committee discretion. Any long term
incentive compensation payable to a Covered Employee under this
paragraph 6 shall be paid in accordance with the provisions of
paragraph 8.
7. Code Section 162(m) Provisions:
(a) In accordance with Section 162(m)(4)(C)(iii) of the
Code, prior to any payment under the Plan for a Plan Year or
Performance Period, as applicable, the Committee shall certify in
writing the attainment of the levels of Net Income and ROE under
the formulas in effect under paragraphs 5 and 6 above for such
Plan Year or Performance Period, as applicable, and the amount of
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annual incentive compensation and long term incentive
compensation, if any, payable pursuant to such formulas for such
Plan Year or Performance Period, as applicable.
(b) Notwithstanding any provision of the Plan to the
contrary, in no event shall a Covered Employee be paid in cash
more than (i) Two Million Five Hundred Thousand Dollars
($2,500,000) of annual incentive compensation for any Plan Year
hereunder or (ii) Two Million Five Hundred Thousand Dollars
($2,500,000) of long term incentive compensation for each Plan
Year comprising a Performance Period hereunder. See paragraph 8
below for provisions regarding restrictions applicable to shares
of Restricted Stock payable in accordance with this Plan.
(c) Notwithstanding any provision of the Plan to the
contrary, the Committee in its sole discretion may reduce for any
reason the amount of any annual incentive compensation or long
term incentive compensation otherwise payable to a Covered
Employee hereunder for a Plan Year or Performance Period, as
applicable; provided, however, that no such reduction shall be
made unless first recommended to the Committee by the Chief
Executive Officer of the Company.
8. Payment of Incentive Compensation:
Any annual or long term incentive compensation payable
hereunder to a Covered Employee shall be payable partly in cash
and partly in shares of Restricted Stock in accordance with, and
subject to, the provisions of this paragraph 8. At least ten
percent (10%) of a Covered Employee's compensation payable
hereunder, and if and as determined by the Committee up to fifty
percent (50%) of such compensation, shall be payable in shares of
Restricted Stock. The number of shares of Restricted Stock shall
equal the number of whole shares of Common Stock that could be
purchased with such compensation after applying either a twenty
percent (20%) or thirty percent (30%) discount from the Fair
Market Value of the Common Stock determined as of the last day of
the applicable Plan Year (in the case of an annual incentive
compensation award hereunder) or Performance Period (in the case
of a long term incentive compensation award hereunder). The
Covered Employee shall elect the applicable discount rate. If
the Covered Employee elects the twenty percent (20%) discount
rate, the Restricted Stock shall have a two (2) year Period of
Restriction beginning as of the last day of the applicable Plan
Year or Performance Period to which such compensation relates,
and if the Covered Employee elects the thirty percent (30%)
discount rate, the applicable Period of Restriction shall be four
(4) years beginning as of such date. Any shares of Restricted
Stock to be issued to a Covered Employee hereunder shall be
issued from the pool of shares available for issuance under the
Stock Plan, shall be evidenced by an appropriate award agreement
under the Stock Plan and shall be subject to any applicable
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limitations set forth in the Stock Plan regarding the number of
shares which may be awarded to an individual under the Stock Plan
in any given calendar year. Any cash payable hereunder shall be
paid as soon as practicable following the end of the applicable
Plan Year or Performance Period. Notwithstanding the foregoing,
if a Covered Employee's employment with the Company and its
affiliates is terminated for any reason (including death) by any
party prior to the Covered Employee having received any cash or
shares of Restricted Stock payable hereunder, the Covered
Employee shall forfeit and have no further right to receive any
such cash or shares of Restricted Stock. Any elections by a
Covered Employee under this paragraph 8 which are intended to
provide for a deferral of compensation shall be made by an
irrevocable written election of the Covered Employee in such form
and at such time as is approved by the Committee. Any amount
payable hereunder shall be subject to applicable payroll and
withholding taxes.
9. Shareholder Approval:
In accordance with Section 162(m)(4)(C)(ii) of the Code, the
effectiveness of the Plan and of any annual or long term
incentive compensation awarded hereunder is subject to the Plan's
approval and ratification by the shareholders of the Company
after disclosure to the shareholders of the Company of the
material terms of the Plan, such approval and ratification to be
obtained (i) on or before September 30, 1996 and (ii) at such
other times as required by Section 162(m)(4)(C)(ii) of the Code.
10. Amendment, Modification and Termination of the Plan:
The Board of Directors of the Company may amend, modify or
terminate the Plan at any time, provided that no amendment,
modification or termination of the Plan shall reduce the amount
payable to a Covered Employee under the Plan as of the date of
such amendment, modification or termination.
11. Applicable Law:
The Plan shall be construed, administered, regulated and
governed in all respects under and by the laws of the United
States to the extent applicable, and to the extent such laws are
not applicable, by the laws of the state of North Carolina.
12. Miscellaneous:
A Covered Employee's rights and interests under the Plan may
not be assigned or transferred by the Covered Employee. To the
extent the Covered Employee acquires a right to receive payments
from the Company under the Plan, such right shall be no greater
than the right of any unsecured general creditor of the Company.
Nothing contained herein shall be deemed to create a trust of any
5
<PAGE>
kind or any fiduciary relationship between the Company and the
Covered Employee. Designation as a Covered Employee in the Plan
shall not entitle or be deemed to entitle a Covered Employee to
continued employment with the Company.
6
EXHIBIT 10.3
OAKWOOD HOMES CORPORATION
LONG-TERM INCENTIVE COMPENSATION AWARD AGREEMENT
AWARDED TO AWARD DATE PARTICIPATION
PERCENTAGE
11 15 95
This Long-Term Incentive Compensation Award (the "Award") is made by
Oakwood Homes Corporation, a North Carolina corporation ("Oakwood"), to
you, an employee of Oakwood or one of its Subsidiaries, pursuant to the
Oakwood Homes Corporation Executive Incentive Compensation Plan (the
"Plan"). The Plan is attached as Exhibit A, and its terms and
provisions are incorporated herein by reference. A Prospectus
describing the Oakwood Homes Corporation Key Employee Stock Plan, which
works in coordination with the Plan, is enclosed as Exhibit B. The Key
Employee Stock Plan is available on request. When used herein, the
terms which are defined in the Plan shall have the meanings given to
them in the Plan, except as modified herein. Words not defined in the
Plan shall have the meanings set forth in the Oakwood Homes Corporation
Key Employee Stock Plan.
Oakwood recognizes the potential value of your contribution to Oakwood
and has made the above set forth target award to you, subject to the
terms and conditions set forth herein.
Now, therefore, you and Oakwood mutually covenant and agree as follows:
1. Subject to the terms and conditions of the Plan and this Agreement,
Oakwood awards to you a participation in an incentive compensation
pool (the "Pool") established under the Plan. Your participation in
the Pool shall be the percentage set forth above. The Performance
Period shall be the three Plan Years beginning October 1, 1995. The
Pool shall be 10% of the amount by which Oakwood's Net Income
exceeds a 10% Return on Equity ("ROE") determined by averaging the
ROE's for the Plan Years of the Performance Period, except that the
Committee has reserved the power, in its sole discretion if
recommended by Oakwood's Chief Executive Officer, to reduce for any
reason the incentive compensation payable to you hereunder,
including, without limitation, increasing to a percentage greater
than 10% the threshold Return on Equity that must be earned before
any Pool will begin to accrue for any Plan Year.
2. Incentive compensation earned under the Pool shall be paid as
follows: 50% shall be paid in cash and 50% shall be paid in
Restrictive Stock, both to be paid in the manner and to be subject
to the provisions for forfeiture set forth in Section 8 of the Plan,
including that you must be employed by Oakwood at the time of
payment of the Award or the Award is forfeited. You may elect the
vesting period for your Restrictive Stock by filling out the form
set forth as Exhibit C.
<PAGE>
3. By signing this Agreement, you acknowledge having read the
Prospectus and the Plan and agree to be bound by all the terms and
conditions of the Plan and of the Oakwood Homes Corporation Key
Employee Stock Plan.
4. You agree that you will comply with (or provide adequate assurances
to future compliance with) all applicable securities laws and income
tax laws as determined by Oakwood as a condition precedent to
payment of the Award.
5. Payment of the Award shall be made only upon certification by the
Committee as further set forth in the Plan. Any disputes of any
nature with respect to this Award shall be determined by the
Committee in its sole discretion.
6. The existence of this Award shall not affect in any way the right or
power of Oakwood or its shareholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes in
Oakwood, Oakwood's capital structure or its business, or any merger
or consolidation of Oakwood, or any issue of bonds, debentures,
preferred or prior preference stocks ahead of or convertible into,
or otherwise affecting the Common Stock or the rights thereof, or
the dissolution or liquidation of Oakwood, or any sale or transfer
of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise. The
existence of this Award shall not affect in any way the right or
power of Oakwood or its Subsidiaries to terminate you nor shall it
in any way constitute a contract of employment other than employment
at will.
7. Any notice which either party hereto may be required or permitted to
give to the other shall be in writing and may be delivered
personally, by intraoffice mail, by fax or by mail to such address
and directed to such person(s) as Oakwood may notify you from time
to time; and to you, at your address as shown on the records of
Oakwood, or at such other address as you, by notice to Oakwood, may
designate in writing from time to time.
IN WITNESS WHEREOF, Oakwood has caused this Long-Term Incentive
Compensation Award Agreement to be executed by its duly authorized
officer, and you have hereunto set your hand and seal, all as of the day
and year first above written.
OAKWOOD HOMES CORPORATION EMPLOYEE:
By:
_______________________________ ______________________________(Seal)
Vice President
<PAGE>
EXHIBIT B
Oakwood Homes Corporation
KEY EMPLOYEE STOCK PLAN
Beneficiary Designation Form
With respect to the above described award of Oakwood Homes
Corporation common stock (the "Shares") under the Oakwood Homes
Corporation Key Employee Stock Plan (the "Plan"), I hereby designate the
following person or entity as my beneficiary with respect to the Shares
payable, if any, under that Plan in the event of my death.
If my beneficiary named below predeceases me, any such Shares will
be paid to my estate.
Name and Address Relationship
of Beneficiary Social Security # to Participant
-------------------- ----------------------- ---------------------
-------------------- ----------------------- ---------------------
--------------------
--------------------
I understand that I may change this designation at any time by
executing a new form and delivering it to the Oakwood Personnel
Department.
Witness:_____________________ ______________________________________
Signature of Participant
Date: ____________________________________
Received by Oakwood Personnel Department this ____ day of _________, _____.
By: ______________________________________
<PAGE>
EXHIBIT C
OAKWOOD HOMES CORPORATION
Long-Term Incentive Compensation Award Agreement
Vesting Election
With respect to any Restricted Stock of Oakwood Homes
Corporation that I become entitled to receive pursuant to the above
described Long-Term Incentive Compensation Award and pursuant to
Section 8 of the Oakwood Key Employee Stock Plan, I hereby elect
the
[ ] twenty percent (20%)
[ ] thirty percent (30%)
discount rate for purposes of determining the number of shares of
Oakwood Homes Corporation Common Stock (the "Shares") deliverable
to me.
This election is irrevocable. I understand that if I have
elected the 20% discount rate, the applicable number of Shares
shall be issued and delivered to me as of the last day of the
second Plan Year following the end of the Performance Period; and
if I have elected the 30% discount rate, the applicable number of
Shares shall be issued and delivered to me as of the last day of
the fourth Plan Year following the end of the Plan Year or Perfor-
mance Period. I further understand that, if my employment with
Oakwood and its affiliates is terminated for any reason (including
death) prior to my having received delivery of any Shares as
described above, I shall forfeit and have no further right to
receive any such Shares.
At the time I am awarded such Restricted Stock, I shall enter
into a Restricted Stock Award Agreement under the Oakwood Homes Key
Employee Stock Plan setting forth in writing the terms of the Award
as described above.
Date: _________________, 19__.
______________________________
[Signature of Participant]
Received by Oakwood Personnel
Department this ____ day of
_______________, 19__.
By:_____________________________
<PAGE>
EXHIBIT D
NationsBank Corporation
KEY EMPLOYEE STOCK PLAN
Beneficiary Designation Form
With respect to the above described award of NationsBank
Corporation common stock (the "Shares") under the NationsBank
Corporation Key Employee Stock Plan (the "Plan"), I hereby
designate the following person or entity as my beneficiary with
respect to the Shares payable, if any, under that Plan in the event
of my death.
If my beneficiary named below predeceases me, any such Shares
will be paid to my estate.
Name and Address Relationship
of Beneficiary Social Security # to Participant
-------------------- ----------------------- ---------------------
-------------------- ----------------------- ---------------------
--------------------
--------------------
I understand that I may change this designation at any time by
executing a new form and delivering it to the Corporate Personnel
Group.
Witness: ________________________ _________________________________
Signature of Participant
Date: ________________________________
Received by Corporate Personnel Group this ____ day of _________,
_____.
By: ___________________________________
<PAGE>
EXHIBIT 10.4
SCHEDULE IDENTIFYING OMITTED
LONG-TERM INCENTIVE COMPENSATION AWARD AGREEMENTS
Name Participation Percentage
Nicholas J. St. George 34%
A. Steven Michael 18%
C. Michael Kilbourne 12%
J. Michael Stidham 5%
Larry T. Gilmore 5%
Myles E. Standish 4%
Jeffrey D. Mick 4%
Douglas R. Muir 4%
EXHIBIT 11
OAKWOOD HOMES CORPORATION AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF EARNINGS PER SHARE
(in thousands, except per share data)
Three months ended Nine months ended
June 30, June 30,
1996 1995 1996 1995
Weighted average number of common
shares outstanding (1) 44,999 44,242 44,736 44,144
Add: Dilutive effect of stock
options, computed using the
treasury stock method (1) 1,844 1,836 1,847 1,872
Less: Unearned ESOP shares (1) (157) (198) (165) (66)
Weighted average number of common
and common equivalent shares
outstanding (1) 46,686 45,880 46,418 45,950
Net income (fiscal 1995 is pro forma) $17,869 $12,241 $47,898 $30,315
Earnings per common share - primary
(fiscal 1995 is pro forma) (1) $ .38 $ .27 $ 1.03 $ .66
Weighted average number of common
shares outstanding (1) 44,999 44,242 44,736 44,144
Add: Dilutive effect of stock
options, computed using
the treasury stock method (1) 1,844 1,842 1,882 1,973
Less: Unearned ESOP shares (1) (157) (198) (165) (66)
Weighted average number of common
and common equivalent shares
outstanding (1) 46,686 45,886 46,453 46,051
Net income (fiscal 1995 is pro forma) $17,869 $12,241 $47,898 $30,315
Earnings per common share - fully
diluted (1995 is pro forma) (1) $ .38 $ .27 $ 1.03 $ .66
(1) Share and per share amounts have been adjusted retroactively to give effect
to the 2-for-1 stock split. See Note 2 of the Notes to Consolidated Financial
Statements.
19
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
REGISTRANT'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER ENDED JUNE 30,
1996 FILED AS PART OF THE REGISTRANT'S FORM 10-Q FOR THE QUARTER ENDED JUNE 30,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-1-1995
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 32,912
<SECURITIES> 0
<RECEIVABLES> 473,714
<ALLOWANCES> 5,054
<INVENTORY> 167,544
<CURRENT-ASSETS> 0
<PP&E> 161,559
<DEPRECIATION> 36,666
<TOTAL-ASSETS> 836,297
<CURRENT-LIABILITIES> 316,649
<BONDS> 140,259
0
0
<COMMON> 22,588
<OTHER-SE> 346,441
<TOTAL-LIABILITY-AND-EQUITY> 836,297
<SALES> 606,797
<TOTAL-REVENUES> 689,106
<CGS> 432,820
<TOTAL-COSTS> 593,236
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,349
<INCOME-PRETAX> 78,521
<INCOME-TAX> 30,623
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 47,898
<EPS-PRIMARY> 1.03
<EPS-DILUTED> 1.03
</TABLE>
